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Mortgage
Rates
Mortgage
rates are watched closely as they are one of the key
components in keeping the housing industry moving. So, what are mortgage
rates and how do they define today's housing industry?
What
Determines Current Mortgage
Interest Rates?
Mortgage
interest rates
are the interest rates that lenders are willing to lend to borrowers
seeking a home mortgage. These rates are based on risk and consider:
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Credit
risk. Based on your credit report, a lender will determine
your odds of repaying your mortgage loan. The higher the credit rating,
the less risk of a mortgage default. The lower the risk, the lower the
interest rate charged by the lender to the borrower.
-
Home
equity and home values. A borrower with a sizeable down
payment in a market with increasing, or stable, home values will
warrant a lower interest rate than a borrower without them.
-
Current
market conditions. Lenders nervous about today's market
conditions are apt to discourage new home loans by increasing mortgage
interest rates
and tightening underwriting conditions.
When lenders
begin raising mortgage
rates, home sales and refinances slow down affecting our
nation's economy. In today's volatile housing market, we are seeing the
government attempting to keep interest rates low to keep the housing
industry from a screeching halt. However, housing is volatile and
lenders are a lot more cautious about lending and are tightening
lending guidelines to protect themselves. Hopefully, their reluctance
to lend will turn around soon and the housing industry will realize a
much needed boost.
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